Trade – EU ultimatum

“The EU Commission is using the heavy artillery” commented diplomats from the African, Caribbean and Pacific (ACP) states. This reaction came after the announcement by the EU Trade Commissioner, Karel De Gucht, of his plan to put an end to the quota-free and duty-free preferential access to the EU market of 18 states by 1st January 2014; unless, they sign an economic partnership agreement (EPA) with Brussels before that date. Yet, the measure still needs to be rubberstamped by the EU Parliament and the 27 EU member states.

The countries which are concerned are those who initialled negotiations to introduce gradually free trade, but have not ratified yet such an agreement. For nine of them (Burundi, Comoros, Haiti, Lesotho, Mozambique, Rwanda, Tanzania, Uganda and Zambia), the issue is not too dramatic because they agreed to the “everything but arms” (EBA) regime established in 2001. But seven lower-middle-income countries (Cameroon, Côte d’Ivoire, Fiji, Ghana, Kenya, Swaziland and Zimbabwe) risk to get a deterioration of their market access and stay with a General Special Preferences treatment (GSP) which is less favourable than the current Cotonou regime. If they don’t sign the EPA before the deadline set by De Gucht, “these countries will be treated on the same footing than India, Brazil and China. But there will be unable to compete with them. ACP exporters of semi-finished products will be the first to be hit” the Assistant Secretary General of the ACP Group, Achille Bassilekin, tells Southworld.
Accordingly, the impact can be serious, even if some countries rush and sign an agreement in haste, warns Bassilekin. Indeed, he says, the regional integration process risks to be dislocated because we could find in one single economic space such as Central Africa’s Economic and Monetary Community, different customs regimes. Some countries will get an EBA status, others will bet the SPG treatment and others the Post-Cotonou treatment” explains Bassilekin. Moreover, upper-middle-income countries such as Botswana or Namibia which haven’t signed yet any agreement with the EU, risk to loose all kind of preferential treatment.In Bassilekin’s eyes, the real issue is that the EU is trying to position itself on the world chessboard. The European Commission is negotiating simultaneously trade agreements with Central America, South America and South Asia which it considers as more interesting partners as the ACP. The main question is whether or not advantages afforded to the ACP are worth being maintained. On top of that, the EU cannot afford to be attacked in front of the World Trade Organization if it keeps the ACPs’ preferential regime which is considered illegal by large emerging economies.
Besides, according to Achille Bassilekin, there is no certainty any longer that the development targets which were supposed to be met through the EPAs are still among EU’s priorities. The Lisbon Treaty does not mention anywhere the ACPs unlike former treaties, points out the ACP Assistant Secretary General. In the opinion of the French Socialist Member of the European Parliament, Patrice Tirolien, there is now a new geopolitical reality. Large emerging countries such China or India are strengthening their positions in the ACP countries where they are increasingly appearing as an alternative to the EU. In Tirolien’s opinion, De Gucht’s ultimatum aims at forcing the ACP to open up their service, public procurement and intellectual property markets to the EU industry. Yet, says the French European MP, “setting up unilaterally a deadline to the trade talks is not the correct way to deal with partners, especially because the WTO does not request any measure of that kind”.
Meanwhile, the European Confederation of Development NGOs Concord says that the EU bears an important responsibility as the world’s first player in agricultural trade. The EU, say these NGOs on the basis of FAO studies, must stop subsidizing its agricultural exports which compete with the developing countries’ local productions and cause the bankruptcy of their agricultural sectors, contributing thereby to food insecurity.
Concord holds therefore that the EU should not exert pressures to prevent the ACP countries to raise taxes on raw materials exports aimed at encouraging their local transformation. But, the head of the relations with the ACP at the EU Commission’s Directory General for Trade, Peter Thompson, argues that the EU has been more flexible than anybody else over issues such the protection of infant industries and customs duties on exports, during talks with the ACPs. Accordingly, Europe is offering a quota free and duty free access and long implementation periods of the dismantlement of tariffs and also aid to its ACP partners. In Thompson’s view, the European offer has reached its limits he told during a recent meeting of the ACP-EU Joint Parliamentary Assembly’s Economic Committee members.